How To Plan For Your Kids’ College Costs During Divorce

[00:00:04] Welcome to the D Shift Podcast, where we provide inspiration, motivation, and education to help you transition from the challenges of divorce to discover the freedom and ability to live life on your own terms. Are you ready? Let's get this shift started. Hello and welcome to this episode of the D Shift Podcast. And today we're going to talk about something that is near and dear to most parents' hearts.

[00:00:31] And that is, how the heck am I going to pay for my kids' college education? And even more importantly, how does divorce impact this whole process? And what do you do maybe if you think saving for college is a good idea, but your soon-to-be ex or your current ex says, No, I don't want to say, what can you do as a single parent? So I have got a fantastic guest on the podcast today.

[00:00:58] Brian Eister, he is a visionary founder of his own process that I'm going to get you to, I'm going to get Brian to share this information. It's called the GRAD, Grad Process. It's a groundbreaking system created to help families navigate the challenge of paying for their kids' college education without sacrificing their retirement goals. And I'm serious. Brian has this whole alphabet list of initials behind his name. And I know that he has over 28 years of experience in this area.

[00:01:27] And I'm going to let him explain all of this to you. And he can kind of sort out for us what's important for us to know and what's not about this whole idea of divorce, planning for college education for kids. So, Brian, welcome. Thank you so much for having me. I'm excited to chat with you this afternoon. Well, and I'm really excited to talk to you as well because this is September and this is the time when school is starting up.

[00:01:54] And parents, even young ones, are starting to maybe think about the future. And if you've got older kids, you may be really thinking about the not-too-distant future and what divorce is going to look like with regards to your kids' college education. But before we get into all that, Brian, this is your area of focus. How did you get to this point and why is this your area of passion?

[00:02:18] So, the short story is that around 2018-19, many of my clients had children that were nearing college-bound age. And I actually forgot how everyone, myself included, everyone has about a six-month memory.

[00:02:44] They don't remember what happened five, seven, ten years ago. So, as we were sitting down and reviewing and just catching up and how's it going, inevitably, someone would be like, oh my gosh, Brian, I don't care what the market's doing. I don't care about this. Well, I do, but how are we going to pay for school? Remind us again.

[00:03:08] And so, we went back and talked about why we did what we did, when we did it, so forth and so on. Fast forward a little bit later, and a close friend of mine who was a coaching buddy of mine, we were just chatting after practice one day. And this topic came up. And I'm just talking about this and this and this and this. And I was his right-hand man on his own baseball teams.

[00:03:34] And so, it was my job to know the other team and their opposition and their strengths and their weaknesses and what are the rules because I also umpire. I was his guy, his right-hand man. He handled the big picture. You give me the weeds and the details and no one's going to beat me. And so, we were just kind of chatting. And he's like, Brian, you need to talk about this. You need to bring this to the forefront. He's like, more people need to do all about it. And like everything else, I am not ready, aim, fire.

[00:04:03] All right, I've said, some people are just ready, fire, aim. I'm like ready, aim, aim, aim, aim, aim, aim. So, anyway, long story short, it was officially launched in its current capacity last September. But I've been talking about this entire concept and process for almost 25 years. Right, right. Yeah. And that's what I found. You know, most people that are really good at what they do and really have a heart for other people going through the thing,

[00:04:32] they've done the work, they've got the skills, they've got the training, they've done the courses, and they've done the lived experience. And I know that you have strategically planned for your own kids' college. And that really helps, too, I imagine, as compared to somebody who's just theoretically talking about it. It does. So, one of the things that your audience will learn from listening to this podcast is that I'm very passionate about what I do.

[00:05:02] And I'm also, I don't want folks to take it as cocky. I'm just, I'm very confident in what I've done because I'll be the first to admit when I don't know something. And there's a lot that I don't. But with 28 years, I'm sure as you are aware, you have a pretty healthy Rolodex of context where you know who to go and who to come to and get answers. Right. And so, I only bring that up because I'm passionate about what I do.

[00:05:31] And it came to the forefront because no one is talking about it. Right. Not in the level of depth that it needs to be discussed. It is a very emotionally draining time for both student and families.

[00:05:49] And if conversations aren't had prior to one's junior, senior year, even the first semester or the second semester of sophomore year, it can be really challenging. Add in your expertise with divorce and separation. And it adds an additional layer of complexity.

[00:06:12] And I was just asking around and it started to come to this realization that, you know, there's a lot in Michigan. There's over 8,000 financial advisors, as an example. Not many, very few specialize in college planning to the depth that would be required. If I was interviewing you, if I was going through a situation and I needed your expertise, we're going to be talking.

[00:06:40] I'm going to be asking you specific pointed questions. Or if I'm interviewing a new CPA or a tax professional. That just doesn't happen in the financial advising. They say they do it, but they don't. Really what it is, is we're going to have a convo and I'm going to try and say something slick and quick and try and get you to buy a product. And look at how great I am. Right. And again, I'm being facetious. Audience, I'm joking. It's the dry sense of humor. But there is a lot of truth to that as well.

[00:07:08] No one takes the time to learn how the watch was made. Right. And I enjoy. I actually, I'll share this with you with having a lot of background. My mom told me that my preschool teacher thought that right then and there at like four years of age, he's like, the preschool teacher said he's going to be an attorney one day because he loves to argue. Didn't end up becoming an attorney, but maybe I'll add those initials to my name.

[00:07:37] At some point in time. When the kids get out, when the kids get out there. So that's what, so my clients all have, most of them have families. Blended, divorced. I got it all. Okay. Divorced, separated, same sex, traditional, you name it, I have it. And this was gapping.

[00:08:00] And the traditional advice that's being said and recommended to pay for one's school ends up in creating lost retirement income for that individual or family. If I take money today and pay XYZ University, I no longer have that money growing and to be able to use for my own retirement. Right. So how do we take this thing called college planning? How do we take cashflow management?

[00:08:26] How do we take where your assets are positioned, your family dynamics, your situation, circumstances, the tax code, and how do we put the most optimal result together for you? Not your neighbor, not the 32nd financial entertainer on TikTok that has something slick to say. Yeah. Yeah. We could spend a whole podcast of the misinformation on the Facebook groups regarding college planning. It's hilarious. I think I'm going to start a podcast, Mardi, that just rails on these people. Like, you have to be kidding.

[00:08:56] Yeah. Just blatant, flat out, wrong advice. And there's 173 likes to it. Right. Sure. Sure. Holy cow. You know? It all posted under anonymous names like Elephant Weasel 325. Right. Right. Yeah. Yeah. It's crazy. We get the same thing in divorce coaching and law and accounting and psychology now, therapy, you name it. It's all. Everybody's an expert on it.

[00:09:28] Let's look at this from anybody at any point in time. What are kind of the basic options? I know there's like a, what is it? A 529 and there's prepaid tuition options. What are some of the pros and cons of those? And are they the right choice? Excellent question. Let's unpack this. And let me pause for a second because I have like 5,000 thoughts that just came through. Let's find the most relevant ones.

[00:09:57] First and foremost, your audience, what they need to understand is that every vehicle slash product has advantages and they also have disadvantages. I would be extremely cautious if your audience is interviewing anyone or reading or listening and someone takes a very hard line like always or never. Right.

[00:10:28] Which now is going to dovetail. Let's start first with the 529. Very popular. It is. Yeah. Within the financial advising community. Why? Why? You're typically encouraged to invest that money into assets in which an advisor can get a fee under management. Nothing inherently wrong with that.

[00:10:56] But college is more to it than just funding using a vehicle. That should be at the tail end. If there's 20 items, the funding mechanism should be 19 or 20. My biggest issue with 529s is the fact that it's asking you to take your hard earned money and put it into an account that hopefully grows.

[00:11:20] After 17 or 18 years, if you start from birth, you're now starting to see some exponential growth. Now you have to take that money and send it to the university. There are studies out there. And in fact, I will send you a link when we conclude that you can post to this because I don't want your audience to take my opinion. Everything that I say is rooted in fact.

[00:11:48] The Federal Reserve in St. Louis, it's the St. Louis Fed. I forget the web address. They come out, I think, every quarter with U.S. savings rates. Would it surprise you that we are right now economically, historically speaking, in some of the lowest personal savings rates of all time?

[00:12:11] No, that would not surprise me because I actually talk to people all day about their money, even though I don't work in the money field. So, yeah. Yeah. No, it's not surprising. It floats around right now anywhere between 3% and 5%. I don't know off the top of my head what it is, but let's just split the middle and call it U.S. savings rates right now is 4%. If you want a chance to succeed in retirement, just in general, you need to be saving 15% to 20%. Different day, different story.

[00:12:40] So, if I'm already struggling, I have a 22-year-old and an 18-year-old. They will both be in college next year. That wasn't the plan. My oldest had to take a gap year in the middle of her college schooling to just have a hard reset. And we're all better for it as a result of that. But I thought that I was just going to have eight continuous years. No. Now what I had was I had two in the beginning, a gap year. Then I have now two in school at the same time.

[00:13:11] And if savings is down in general at 4%, and I'm being told the only thing to do to pay for school is just put money into a 529. So, if I can scrimp and save and put together a few bucks to put into a 529 that goes to a university, kid wins. University wins. Mom and dad lose. I inherently have a big time. I do entire classes talking about the lost opportunity cost. Right.

[00:13:36] The average 45-year-olds, mom and dad, parent one, parent two, however you want to look at it. If they are bankrolling one child's education, and let's say that the tuition is $25,000 a year. At 45, by the time that they get to 65 years of age, if you get a typical average rate of return in the market, you can go wherever.

[00:14:02] I have calculators that folks can download and check out. You're going to lose out on anywhere between $6,000 to $750,000 of lost capital. Wow. That's a lot. But that's... Now, let's take that further for a second. A dollar amount that size typically does not resonate with people. There's just... There's a disconnect. Right.

[00:14:31] Because, again, the typical person... You know, if they're doing good, if they're saving $15,000 to $20,000, many aren't... They just can't fathom that large amount. But here's what they can resonate with. If you take that $750,000 and you create an income stream off of it, that is a $25,000, $30,000, $40,000 lost retirement income.

[00:15:03] That is the biggest issue that I have. Proponents to what I am saying are going to say, you have tax-deferred growth. True. You have investment options. True. I'm not... I am not disagreeing with anything that they bring up. I'm shoulder-to-shoulder with them. But where their conversation ends... And for the audience, this is where I get passionate now. So I'm not knocking them. Where their conversation ends is where mine begins.

[00:15:32] Because those folks are not talking about lost opportunity costs. Right. What I'm suggesting is, Mom, Dad, how would you like to pay for your kid's school? And you two aren't up at night fighting about, do we pay cash? Which credit card do we put it on? I told you, don't buy that package from Amazon. These are all real things that I get 24-7 in my audience. I'm not paying for it. I have a family right now. I'm going to keep it very general.

[00:16:01] I was shocked. Love the family. Great kids. Their stance. And typical middle-of-the-road, middle-class, solid folks. I didn't get money for school. Yeah. My kid can work through it. They can just do... And it was... The delivery and the tone, I was like, holy... It really changed my opinion of them. Yeah.

[00:16:28] My personal view, and this is an opinion, and it's rooted my folks inherited money from my grandmother. They set it aside, and it paid for my younger brother in my school. And their method of paying for my school is different than what I'm doing for my children. But here's what I'm doing. I am paying for their school, and they are not saddled with debt. And I have the strategies and the tools, because I'm in this,

[00:16:57] where my wife and I win, because we're not going to lose out on this money for retirement. Right. Right. So I'm taking a little bit of everywhere. And what I like to say is, so with 529s, I don't like using them long-term for accumulation. You don't need a 529 to pay for college. You just need money, Marty. Right. You just need money. That money can come from anywhere and everywhere, and that's where we get into a more personal convo and figure out where are the best sources.

[00:17:27] The prepaid plans, that's also a subsection of the 529 code. That is a prepaid plan, and there are, I know of a few carriers that are big players in it. Basically, what you're doing is you are setting money aside today to purchase what they call contracts or semesters. Who knows what they label it at the time. Right.

[00:17:52] And so what it is is you're buying tomorrow's cost at today's dollars. Cool. Once again, I'm going to go back to the proponents and say, why would I want, why, if I'm scraping and saving 3%? And then in a typical issue, you're going to know, I just hear the sound bites.

[00:18:19] One of the biggest stresses and divorces and cause of divorces is over money. So why am I going to take 10, 15, 20, $30,000 from my own world, get into an argument with my spouse or inherit it from grandma and grandpa and put it into this prepaid plan. And I'm going to pick on Michigan State University right now because this is both my alma mater and my wife's.

[00:18:49] So I can have the fanciest dining hall over in Brody that is the largest dining hall outside of a U.S. military institution. Why am I going to prepay that so then they can have, like I went into this like a year ago, it's like, holy cow. It's like a cruise ship dining. It's like a five-star Michelin buffet. No wonder it's not the freshman 15 anymore. It's the freshman 40.

[00:19:17] And so, however, let me circle back around. Where would I use those? And I use both of them. The 529 more than the prepaids. Where would I use them? So I personally use, I have 529s for both of my girls. Now, your audience may say, well, you just spent five minutes waxing poetic and railing on them.

[00:19:45] No, I'm railing on the purposeful accumulation in that account to then deplete for university. But it's a tool. So let me give you an example. At the end of the day, you just have to write a check to a university. Right. Some parents, they can cash flow it. That's cool. Forget about, every parent right now is listening and they got the dollars and cents in their mind. I'm going to say, forget what your actual dollars are.

[00:20:14] So in my world, with my oldest, and I will admit it because I'm transparent, my oldest right now, it's roughly after scholarships and merit awards, so forth, so on, about four grand a semester. Okay. I think cash flow four grand a semester. Okay. Over four months, you're looking at about a grand, you know, eight, nine hundred. Okay. Here's what I do.

[00:20:42] The last week of December in 2025, I deposited $10,000 into the 529 in Michigan that's self-directed. There's no advisor to it. You know, I put it straight into, every 529 in the country has a guaranteed or fixed account. Who knows what it's called, but it's not, it's an account that's not going to lose value because it's not tied to the stock market. Right. Just call the cash account with a little bit of interest. Look it up.

[00:21:13] I put the money into the 529. I then wait until January 1. I get the full $10,000 state tax deduction for Michigan for my 2025 return, but because I pull it out in 2026, it's considered qualified for higher educational purposes, but it's a new calendar year. Right. So I don't get the net.

[00:21:42] See, if I deposited money in 2025 of 10 grand, let's say in October, or let's say end of August when school's going to start, and then I pay the, the, the spring of 26 tuition, like during Christmas break. And let's say it's four. That gives me a net six. I can only write off six. No one knows this Marty. Right. So again, it's in the weeds. It's nuanced. It's knowing the softball and baseball rule book and knowing when to pull out certain things.

[00:22:11] We do with my clients. The money is elsewhere. It comes into their checking or savings. We're going to fund the 529. We're going to cross over until one, one. And then we're going to write it out. And then we can also specify that, that pulling the money here, we can allocate. If I got a hundred grand, this 10 grand, by the way, is coming from this deposit that was made in 2018. It, you know, accounts call it a FIFO or LIFO, or, um, I got this idea from a CPA and a CPA.

[00:22:40] This gal is a CPA, enrolled agent, EA, and a master's in taxation or law. I might be butchering that, but credentialed. Right. She's like, she's like, you absolutely can do it. It's in the code. I said, can you source it for me? She's like, boom, it's good enough for me. Lunch is on me. Yeah. And this is why I think, and, and I can't believe how incredibly fast these conversations go. We are almost out of time,

[00:23:05] but what I really love about this and what I'm hearing Brian say is there isn't this one size fits all if you're really going to do it smart. And so really talking to somebody, talking to Brian, getting clear on what your options are and understanding these moving parts is important before you make a final decision. Yes. Absolutely. Let me dovetail. Let's talk a little bit about your specific niche,

[00:23:31] because this is something that is awfully uncomfortable for families. And that is the divorce or the separation and families. And I have been a part of those convos to share with your audience. Here's where your expertise and your ability is invaluable. By nature, divorce is emotional. So, what is happening in the moment may not be reflective of what they really wanted to have happen. Yes.

[00:24:01] Depending on how the divorce goes down. If it's amicable, good. If you ended up catching in. Actually, I don't want to use that. It's a funny. If, if, uh, if it's not as amicable, now people are taking sides. So, um, what I recommend for your clients or families that are contemplating or going through it is that this is where the divorce decree needs to come in. Not a, he says, she said, right.

[00:24:30] You know how many times where it's like, you know, I'll sit down with the wife. Oh, well, my husband said he's going to take care of me or, or, or my husband said that, uh, he'll take care of the kids. Uh, meanwhile, then, you know, she finds someone else. Maybe the husband who is the breadwinner doesn't like this. Someone else. So was jealous because he's better looking. And now this guy is going to say, you know, I'll give you the double bird and off we go to the races. And it's now heated. And the unintended consequence is that the emotional,

[00:24:58] the kid feels terrible. This can all be avoided. So if, if that's where, um, I'm sure that you are counseling folks, like what are the college plans? What, what were you guys doing before? When I am working with folks that is in this spirit, it's the first thing we talk about. Right. Until what's going on, where are you at? How is, you know, who, what, when, where, how, why, how's it going? That's number one. Number two. Um,

[00:25:29] extremely vital for parents. Once their kid turns 18, you get needs their own legal documents. Right. Yeah. I can give you real world examples too personal to share over the streams like this, but, um, I, I know of three of them where, uh, things went sideways real quick when they went off to school. Right. And mom and dad can't come in and save the,

[00:25:57] they can't helicopter come in and say the day because doctor so-and-so says, show me the paperwork. Right. Yeah. Yeah. And so just, um, you know, that's where your expertise to come in. People ask, well, what should my kid have? I don't know. That's not my, that's not my lane. I drive in, uh, a basic will, um, healthcare directive. That's about as far as I can take you. Right. You know, um, and so those are,

[00:26:27] those are the huge things is, is that it doesn't, divorce is already messy and complicated and emotional and, and volatile. But, um, that is where a professional like you can really help smooth it over. Yeah. And, and again, you know, for, if you're thinking about this, even if you got little ones, it's important to start planning early. And especially if you're going through a divorce, because you can actually write things into a mediated settlement, or you can get them put into,

[00:26:56] uh, you know, a divorce decree. If you go through the litigation process, you can get this stuff written out, but it can't just say fund a college fund. It's gotta be very specific. And so that's where, again, talking to somebody that can really help you structure that so that it doesn't cost you money. It actually can possibly make you money and provide your kids. The opportunity to go to college is really critical. Exactly. I can think of a one particular case here where, um,

[00:27:25] I was introduced to the situation from a professional like yourself here locally, and it was contentious. And, um, the attorney is like, man, I don't know what I'm like. All right. So let's have lunch. See if we can't figure out. And just having an outside perspective. I don't know the legal end, but I know the college and the strategy and the planning. And I'm like, okay, what it sounds like no one is opposed to paying for the kid's school. What they're opposed to is they don't want it.

[00:27:52] They don't want to feel like the other spouse is going to benefit or gain, or they're going to win. Right. Like this dude was like uber competitive. So am I. So we got in there and I'm like home. So let's just, just, I get you. I get you. I know where you're coming from. Um, my father, uh, I'm a product of my father's second marriage. So I am intimately familiar with what happened on the first and it wasn't roses and ponies. Right.

[00:28:21] And so. 10 minutes of talking about that and putting him at ease and being like, okay, it's kind of funny. You know, when you, when you said mediation immediately, I thought of wedding crashers, you know, at the end or at the beginning, look, you know, here and here, it's kind of like what it was, you know? Yeah, exactly. And, uh, once, once I'm like, look, I get you, but let's, let's look at it this way. And then boom. And it turns like,

[00:28:51] thank you so much. It was just, it was like, I couldn't get them to budge. And I'm like, cool. Great. You know what? Lunch is on you next week. Not me. It's amazing how that can sometimes happen. Brian, you have shared a wealth of information. What's the kind of the one golden nugget of wisdom you want to leave with people? Excellent question.

[00:29:20] College planning and funding and this whole college thing is extremely personal for folks. They're coming, the, the parents are coming in with their own set of preconceived ideas and baggage and so forth and so on. My recommendation is two things. Number one, talk with your spouse as to what is it that you're trying to accomplish? What is it that you're trying to accomplish? So what is the objective? Okay, folks think of objective and big, bold,

[00:29:50] capitalized letters right now. There's thousands of methods. What's the objective? What are you trying to achieve? Number two, many folks that I talk to, they're like, oh, well, I have a financial advisor and so forth. All right, cool. I'm going to send it to you. Um, I have a, how good is your financial advisor when it comes to college planning quiz?

[00:30:16] Because I was coming across this and it was created as a result of other people basically just becoming jealous because I decided to spend more time in the batting cage and getting a Tony Gwynn swing as opposed to some hack. And here's a 10 question quiz. If they can't pass this, do whatever you want, but you better not be talking shop with them. So nugget, talk with your spouse. What are you trying to accomplish?

[00:30:42] And make sure the person that you are trusting knows what they're doing. Great. That's an excellent piece of advice. Brian, if people want to reach out, find out more about what you do or maybe even work with you, what's the best way to get in touch with you? Absolutely. So I would assume in the show notes, you'll have my web address. It's essential strategies.net long. I'm not going to, and right now I have LinkedIn and within LinkedIn,

[00:31:06] you can click on my contact and there's other avenues where I have some sites from the designations I hold in college that have landing pages and downloadable stuff. My website has downloadable stuff. And so very easy to get to. Those are the two main platforms. If you get there, you will ultimately get to me. Great. Thank you, Brian. Thank you so much for sharing all of this. I know we could have talked a lot longer because this is a very in-depth. We just barely scratched the surface,

[00:31:34] but hopefully it gave people enough of an idea. Well, maybe I need to think about this before I just pick one or the other or do something, do something else. Talk to somebody who knows what they're doing. Brian, thank you so much for being here and sharing all this. My pleasure. Thank you. And thank you everybody for listening into this episode of the D-Shift. And don't forget to tune in to the next one. Thanks for listening and supporting the D Shift podcast. If you would like to attend live trainings by our amazing guests and have a chance to ask

[00:32:03] questions and get answers from our experts, join the D-Shift crew. For more details and to sign up, head on over to www.divorcecoachforwomen and click on the podcast page. ? Thank you.